When a person has worked and paid taxes for 40 quarters during their life, they may be entitled to premium-free Medicare Part A.
Medicare Part A is free for many adults based on how many qualifying quarters they have worked in their lifetime.
This article will look at what it means to have worked 40 quarters, how this may affect premiums, and other eligibility and qualification details.
Medicare bases the cost of Part A premiums on the number of quarters in which a person worked and paid Medicare taxes before receiving Medicare.
Qualifying quarters worked are also called credits, so for each quarter that a person worked, they earned a credit. To qualify for premium-free Medicare Part A, an individual must have worked 40 quarters in their lifetime.
The Social Security Administration fund Medicare. Taxes that automatically get deducted from an individual’s paycheck include Medicare taxes.
Medicare tax funds Medicare Part A insurance when a person becomes eligible at age 65 or sooner due to a disability.
To calculate a person’s eligibility for premium-free Medicare Part A insurance, Medicare counts the number of employment quarters the individual worked.
A quarter of coverage is a 3-month calendar quarter in which a person worked in a job and paid Medicare taxes. Every quarter of coverage earned counts as one credit toward qualifying for free Medicare Part A.
During a quarter of coverage, an employee pays Federal Insurance Contributions Act (FICA) taxes, which combine withheld taxes for Medicare and Social Security.
On a paycheck, Medicare withholding tax appears as Fed Med/EE. Each year has four quarters. Roughly, 40 quarters equals 10 years of work.
The 40-quarters rule only applies to premium-free Medicare Part A. Other parts of Medicare, including Medicare Part B, involve a monthly premium regardless of how long a person has worked in their lifetime.
Working quarters effect on monthly premiums
Although Medicare requires 40 credits earned for premium-free Part A coverage, people who earned fewer credits may still obtain Medicare Part A, but they must pay a monthly premium.
The monthly cost for Medicare Part A may change, but in 2021, people who paid Medicare taxes and earned between 30 and 39 quarters pay a monthly Part A premium of $259. Individuals who paid Medicare taxes for less than 30 quarters pay $471 a month.
To qualify for premium-free Medicare, an individual must also earn a certain amount during the quarters worked.
Medicare divides yearly earning into quarters to determine how many credits a person has earned.
The earnings required may change from year to year. In 2021, individuals must earn $1,470 per quarter ($5,880 in a year) to be eligible for premium-free Medicare.
Some people may earn enough in one quarter to qualify for all four credits. In other cases, it might take someone the entire year to make enough to be eligible for all four credits earned.
Regardless of a person’s income amount, they cannot earn more than four credits in 1 year.
Earning a higher amount does not affect the amount of Medicare benefits a person receives, either. For instance, a person does not get additional Medicare Part A benefits or discounts because they earned more than the minimum 40 quarters.
Additionally, even when a person qualifies for premium-free Medicare Part A, they must pay a deductible for certain services.
The specific number of quarters of coverage depends on whether an individual is applying for Part A coverage based on a disability or age.
Adults aged younger than 65 may also qualify for free Medicare Part A if they have:
- received Social Security Disability benefits for 2 years
- amyotrophic lateral sclerosis (Lou Gehrig’s disease)
- end stage renal disease
When in receipt of Social Security Disability benefits, individuals must have worked a certain number of quarters, depending on their age, to be entitled to premium-free Medicare Part A.
The numbers of quarters required include:
- Before age 25: At least six qualifying quarters in the 3 years before the disability started must be earned.
- Between age 24 to 31: A person must have earned quarters for working half the time between age 21 and the age that they acquired a disability. For example, if a person acquired a disability at age 29, there are 8 years between turning 21 and reaching 29. This means that a person would have to have worked for 4 years, gaining 16 credits.
- Age 31 and older: An individual must have earned a minimum of 20 credits in the 10 years before they acquired a disability.
A married person who has not worked at all or has not worked enough to earn credits towards free Medicare might gain premium-free Part A through their spouse’s employment.
To qualify based on a spouse’s employment, an individual must be aged at least 65, and their spouse must be aged 62 or older and have earned enough Medicare credits to qualify for free Medicare Part A for themselves.
Options are available to obtain Medicare Part A if a person did not earn enough working quarters.
Medicare Savings Programs are federally funded assistance programs that each state administers to help with the costs associated with Medicare.
There are four different Medicare Savings programs. Most of the programs help pay for Medicare Part B premiums.
The Qualified Medicare Beneficiary Program helps pay for premiums and other costs of Part A. Income limits apply to qualify for the assistance programs.
For premium-free Medicare Part A, an individual must have worked 40 quarters.
A quarter of coverage indicates a 3-month period of work that includes Medicare taxes. Also, in 2021, a person must earn $1,470 per quarter to qualify.
People who do not have 40 quarters of qualifying employment may buy Medicare Part A.
A younger adult with a disability would not need to have earned the full 40 quarters, but the required number of credits will vary depending on age.
In some cases, an individual who does not qualify alone may qualify based on the work history of a spouse.